Global oil, gas spending to hit $841b this year, says report

GLOBAL oil and gas capital spending in 2011 may hit $841 billion (N127 trillion), based on estimated increasing energy demand across the globe.

A report just released by a UK-based LNGReport, stated that the Middle East Africa would be the major investment market in 2011, with around 26 per cent of capital spending to be spent in the region.

Nigeria has spent more than $27 billion from its oil-windfall savings account in three years, while about $27.5 billion was expended from excess crude account to weather the global financial crisis and counteract falling oil prices.  The country relies on fuel imports for more than 70 per cent of its domestic needs because of a lack of refining capacity.

The Governor of Central Bank of Nigeria, Lamido Sanusi, estimated in June last year that the subsidy on domestic fuel prices will cost the government N520 billion in 2010.

“Because we import a lot of our energy, we don’t get the full benefit of the higher oil price as it translates into higher prices for the petroleum products that we import.

“The government is subsidising those products, which then means you get an increase in government deficits and government spending. So my job gets more difficult managing those things,” Sanusi said.

Brent crude oil was 50 cents lower at $114.46, still within sight of a two and a half year high near $120 hit last month. U.S. crude oil for May, the most liquid contract before the expiry of April later on Tuesday, shed 40 cents to $102.69 as at yesterday.

According to the report, US, Brazil, Australia and Iraq will largely drive the $79 billion growth in global upstream capex in 2011.

“Super majors, state owned companies, global integrated majors tend to increase their capex in 2011 while US integrated companies and non-integrated companies are still cautious on their spending forecasts.

“There will be increasing construction activities in Middle East and Asia Pacific countries, which will drive the 14.2 per cent rise in global refining capital expenditure”, LNGReports added.

It projected that about $60 billion would to be spent on global liquefaction and regasification markets in 2011.

According to the report, that vast potential and technological advances encourage oil and gas companies to increase spending in offshore exploration and production.

Global refining capacity is expected to increase by three per cent between 2010 and 2011, largely driven by increasing investments in Asia Pacific and Middle East.

Source : Guardian